Vietnamese law does not prohibit foreigners from doing business in Vietnam. However, foreigners are required to register their business in the form of establishing a company, contributing to an investment fund, transferring capital contributions, etc.,
The procedure for establishing a foreign investment company is a matter of great interest to many domestic and foreign investors, especially if Vietnam is a potential developing market like today. So what should you pay attention to when setting up an FDI company? Within the scope of this article, I will clarify these issues.
Therefore, foreign investors will contribute capital from the beginning of the company's establishment in Vietnam. Therefore, the capital contribution ratio of foreign investors can be from 1% to 100% of the company's charter capital, depending on the business field.
Using this form, a foreign investor will donate capital to a Vietnamese company that already has a corporate registration certificate. Foreign investors can donate 1% to 100% of their capital to Vietnamese companies, depending on the field of business. Foreign investors go through the procedure to purchase the investment capital and stocks of Vietnamese companies. After that, Vietnamese companies became foreign-affiliated companies.
There are two forms for investors to register a business in Vietnam
Procedures for establishing a foreign-invested company from 1% to 100% capital of foreign investors are as follows.
Apply for an Investment Registration Certificate, including:
A written request for the implementation of an investment project.
Documents certifying legal status:
For institutional investors: A copy of the Certificate of Establishment or other equivalent document certifying the investor's legal status as an organization.
For private investors: Copy of identity card / identity card or passport of the private investor.
Investment project proposal includes investor implementing the project, investment purpose, investment scale and investment capital content. Capital mobilization plan, location, time, investment progress, labor demand, investment incentives proposal, impact assessment, socio-economic efficiency of the project.
Register your business in Vietnam in the form of capital contribution right from the start
Proof of investor's financial capacity:
For institutional investors: Financial statements of investors for the last two years. Or promise financial support for the parent company. Or, we promise financial support from financial institutions. Or ensure the financial capacity of the investor. Or a written explanation of the investor's financial capacity.
For individual investors: Check your account balance and passbook.
Head office lease contract, written confirmation of the lessor's right to lease (the lessor's land use right certificate, construction permit, business registration certificate with real estate business function) or equivalent document).
Proposing land use needs; The location proves that the investor has the right to use the site to implement the project if the project is not allocated or leased land by the State or the land use purpose is not changed. copy of the tenancy agreement or other document. Current investment projects;
An explanation describing the use of technology in an investment project for a project using technology on the List of technologies restricted from transferring under the Law on Technology Transfer, including: machinery, equipment and technical lines main art.
Issuance of Investment Registration Certificate for investment projects not subject to decision on investment policies:
Declare information about investment projects online on the National Foreign Investment Information System
Before carrying out the procedures for issuance of an Investment Registration Certificate, investors must declare online information about their investment projects on the National Foreign Investment Information System. Within 15 days from the date of submitting the online application, the investor must submit the investment registration dossier at the Investment Registration Authority.
After the Investment Registration Authority receives the application, the investor will be granted an account to access the National Information System on Foreign Investment to monitor the processing of the application.
The investment registration agency uses the National Foreign Investment Information System to receive, process and return investment registration results, update the application processing status and issue project codes.
Within 15 days of receiving the complete application, the investment registrar shall issue an investment registration certificate. In case of refusal, the investor should be notified in writing and the reason should be clearly stated.
After the investment registration certificate has been granted to the foreign investment company, the investor shall carry out the procedure for granting the corporate registration certificate in the same manner as the procedure for establishing a Vietnamese company.
List of members (for limited liability companies with two or more members; list of founding shareholders and shareholders who are foreign investors (list of authorized representatives if there are institutional shareholders).
Copy of the following documents: Citizen ID card, personal ID card, passport, or other legitimate personal ID of an individual member.
Establishment decisions, business registration certificates, or other equivalent documents regarding the organization and adult guardianship. Citizen ID, personal identification, passport, or other legitimate personal identification information of an official representative of a member of the organization
For members of a foreign organization, a copy of the business registration certificate or equivalent document must be consular legalized.
Determine capital contributions and the appointment of managers. List of approved representatives (for members of the organization);
An investment registration certificate for investors has been granted.
After the company registration certificate has been granted, the company must publish it on the National Business Registration Portal. At the same time, the publication fee must be paid as required by law. The published content includes the content of the company registration certificate and the following information.
List of founding shareholders; in the case of a legal entity, a list of shareholders who are foreign investors (if any).
Foreign investors can contribute capital to buy shares only if there is a Vietnamese company. If the company establishment procedure has not been completed, the Vietnamese partner must carry out the procedures for establishing a company with 100% Vietnamese capital.
Procedures for business registration in Vietnam in the form of capital contribution or share purchase
Dossier for registration of capital contribution, purchase of contribution books and purchase of shares by foreign investors for Vietnamese companies
Investment registration document, share purchase, investment capital. A written registration of capital contribution, purchase of shares or contributed capital, including: Information on economic organizations, purchase of shares and capital contribution to which the foreign investor intends to contribute capital. Owning charter capital of foreign investors after capital contribution, purchase of shares or capital contribution to economic organizations.
Copy of identity card, identity card or passport for individual investors. A copy of the Certificate of Establishment of a Legal Entity or other equivalent document certifying the investor's legal status as a legal entity.
Written agreement on capital contribution, share purchase, purchase of contributed capital, purchase of shares or contributed capital between foreign investors and economic organizations receiving capital contributions.
Declaration (attached copy) Certificate of land use right of the economic organization receiving capital contribution, shares or capital contribution of foreign investors.
Foreign investors submit documents at the Investment Registration Office of the Ministry of Planning and Investment, where the company's head office is located.
Within 15 working days from the date of receipt of a valid dossier, the Ministry of Planning and Investment shall notify the satisfaction of the conditions for capital contribution, share purchase, contributed capital and Vietnamese companies.
If foreign investors contribute more than 51% of the capital, the Vietnamese company will open a direct investment capital account. Investors make capital contributions and transfer via direct investment capital account.
Members and shareholders transferring capital must declare and pay tax at the time of transfer in accordance with the provisions of the Law on personal income tax and corporate income tax (if any).
Foreign companies enjoy many incentives when registering in Vietnam
After the foreign investor completes the investment, the company will take steps to change the business registration. Adjust business registration to record foreign investors' capital contribution and share purchase in the enterprise registration dossier of competent state agencies.
Above is the content of advice on the procedure for establishing a foreign affiliate company and the notes when establishing a foreign affiliate company. If you have any questions about the business registration in Vietnam please contact the Enterprise Law Consulting Service for advice.
Establish a company with foreign capital under the Investment Law 2020 → What should Expat pay most attention to? Basic conditions, form of establishment ☛ Limited Liability Company or joint stock company, processes, necessary procedures for foreign investors when starting a business in Vietnam...
· Reliability: When registering a company in Vietnam, investors (or company owners) and third parties of that company must present a clear picture and understanding of the business to the government. Registering a company in Vietnam allows third parties to verify the company's status on various matters such as the company's profile, financial situation, list of shareholders, directors and more. As a result, parties such as the company's partners, investors, banks or private lenders consider the company trustworthy.
· Confidentiality: A company is a legal entity established a long time ago. The company usually operates until the owners are no longer in business and then is liquidated. All day-to-day management of the company is usually done by a company director appointed by the shareholders. Some of the advantages of setting up a company are protection of your brand/company name, your personal responsibility for financial losses and the ability to obtain a proper visa to live in Vietnam.
· Thanks to foreign direct investment (FDI) and the strong expansion of the private sector, Vietnam is one of the fastest growing Asian economies with a high GDP growth rate.
· Located in the heart of the Association of Southeast Asian Nations (ASEAN), Vietnam is quite strategically located in terms of market access. In addition, Vietnam has a long coastline and is close to the world's major shipping lanes.
· Vietnam is opening up to the world economy. It is a member of ASEAN, the ASEAN Free Trade Area (AFTA) and the World Trade Organization (WTO). It also has more than 60 double taxation agreements.
· Vietnam's population is young, skilled and large. The literacy rate exceeds 90%.
· Vietnam has a stable state and social structure, which makes it an ideal place for investment.
#1. What industry is expected to do business in Vietnam?
#2. Where is the Vietnam headquarters located? (Hanoi, Ho Chi Minh City, Da Nang...)
#3. What is the investor’s nationality?
#4. Authorized capital Establishing a company with foreign capital?
5. Invest as an individual or enterprise/organization in Vietnam?
Understand and follow
(i) The essence of establishing a foreign company is the "CONCEPT" of the investor from the beginning.
(ii) Investing in Vietnam, are they approaching quickly or slowly?
☝ QUICK ACCESS: Investors will prepare capital, investment areas (ideas), personnel and headquarters location ==> IMMEDIATELY CONTACT A PRESTIGE LAW CONSULTANT.
GRADUAL ACCESS: Ask or invest, “OPEN REP OFFICE’’ then determine whether or not to invest based on results.
IN EITHER CASE, INVESTORS SHOULD READ TO UNDERSTAND AND FIND THE RIGHT DIRECTION (BECAUSE THESE ARE LEGAL AND PRACTICAL RULES)
WHAT DO YOU STUDY? PREPARATION OF INVESTMENT LINES, CAPITAL, AND PLACEMENT IN ORDER
(i) STUDY THE LEGAL REGULATION
(ii) SEARCH FOR THE TYPE OF INVESTMENT
(iii) SEARCH FOR A TIME TO COMPLETE THE PROJECT DOCUMENTATION.
(IV) STUDY THE CONSULTANT’S EXPERIENCE
When a foreign investor enters Vietnam to invest in a project, he/she must follow the procedures to apply for an Investment Registration Certificate. However, before completing the procedures to apply for the Investment Registration Certificate, in some cases, the investor must register the investment policy with the Provincial People's Committee (The first process in setting up a foreign capital company)
☑ Application for registration of the establishment of a company with foreign investment
Individuals and legal entities can use the following legal documents to form a foreign investment company in Vietnam:
☑ An individual is a foreign investor
There are 3 kinds of important records for individuals
# Head office lease agreement
# Confirm a bank with the same amount of capital as the investment share capital in Vietnam.
☑ Organization is a foreign investor
There are 5 types of records for organizations:
# Business registration certificate
# Operating charter of a foreign company (mergers and acquisitions)
→ Note. These two documents must be legalized at the consulate when returning to Vietnam for use.
# Profitable financial statements or bank confirmation equal to the amount of money intended for investment in Vietnam.
# Headquarters lease agreement in Vietnam
# Decision to appoint a legal representative of companies in Vietnam.
Above are the basic conditions for establishing a company with foreign participants.
☑ Time for setting up a company with foreign capital
For investment projects not subject to investment policy decision: 15-20 working days from receipt of complete dossier.
For investment projects subject to investment policy decision: 05 - 10 working days from receipt of investment policy decision
☻ APPLICATION FOR THIS PROJECT POLICY IS ONLY FOR OTHER PROVINCES AND CITIES (EXCEPT FOR HO CHI MINH CITY AND HANOI DOES NOT APPLY)
☻ INVESTMENT LAW 2020, REQUIRES CONSULTATION WITH THE MINISTRY OF DEFENCE ON THE LOCATION OF THE COMPANY'S HEADQUARTERS (EXCEPT FOR THE FOREIGN INVESTOR'S OFFICE BUILDING)
Business registration application form.
List of founding shareholders and foreign investor shareholders (list of authorized representatives, if any)
Copies of the following documents:
Passports or other legal identity documents of participants who are individuals.
Enterprise Registration Certificate (ERC)
For a member who is a foreign entity, a copy of the Certificate of Business Registration or equivalent document must be legalized at the consulate.
This step is very important in order to obtain the green paper (IRC) INVESTMENT CERTIFICATE (WHITE PAPER)
After receiving the political decision of the Provincial People's Committee, proceed to register the establishment of the company.
This step includes REGISTRATION OF THE YELLOW BUSINESS CERTIFICATE (ERC)
An ERC application has a 5-day deadline.
After receiving a Certificate of Business Registration, a company must make a public announcement on the national business registration portal in accordance with the rules and pay the required fees.
The content to be announced includes the contents of the Certificate of Business Registration and the following information:
☑ Line of Business.
☑ List of Founding Shareholders and Foreign Investor Shareholders of Joint Stock Companies.
Implementing Agency: Business Registration Authority Reporting Unit
After obtaining the Certificate of Business Registration and posting the business incorporation application. The business engraves the seals at one of the licensed seal engraving sites. Enterprises determine the number and form of seals themselves, within the limits allowed by law.
1. Declaring and Paying License Fees Declare
The license fee once at the beginning of the business activity by the fee payer, no later than the last day of the month of the beginning of the business activity.
In case the levy payer has just set up a business but has not yet commenced production and operation, he/she must declare the license fee within 30 days from the date of the business registration certificate or date of issue of the license fee obtain investment registration and tax registration.
The deadline for payment of the license fee when starting a business is the last day of the deadline for filing the fee declaration file.
The license fee declaration file is the license fee declaration.
After coming into operation, the company shall pay the license fee annually by January 30 of each year.
2. Notification on the application of the method of calculation of Value Added Tax (VAT) (Form 06/GTGT)
(Note on Form 06/GTGT dated May 11, 2017. Businesses are not required to file Form 06/GTGT to register and change their VAT calculation method. This is one of the provisions of Circular No. 93/2017 /TT-BTC dated 19.09.2017 of the Ministry of Finance).
There are two VAT calculation methods: the deduction method (using VAT invoices) and the direct method (using sale invoices).
To apply the deduction method, the company notifies the tax authority on Form 06/GTGT; the deadline for submitting Form 06/GTGT is before the deadline for filing the first tax return.
3. Notification of use of tax authority services (if any)
Taxpayers who perform tax procedures through tax agents must notify the direct management authority in writing, attaching a certified photocopy of the taxpayer's service agreement, within 05 business days before the tax agent performs tax procedures for the first time as specified in the agreement.
4. Register for a personal tax code
When paying wages to employees, businesses must deduct personal income tax and offer each employee a tax code (if employees do not have a tax code). Individuals who receive wage or salary income authorize the income unit to perform tax filing and dependent filing procedures with the Internal revenue service (IRS).
5. Register with the tax authorities for electronic transactions.
Because Ho Chi Minh City has all the necessary infrastructure for information technology, firms based there must file their taxes online and pay them electronically.
With a publicly available digital signature, a business registers for online filing of tax return and electronic tax payment at: http://nhantokhai.gdt.gov.vn/
Provisions on capital accounts for foreign investors are spelled out in State Bank Circular 05/2014/TT-NHNN dated 03.12.2014 governing the opening and use of capital accounts for indirect investment for portfolio investment activities in Vietnam and Circular. 19/2014/TT-NHNN dated 08.11.2014 of the State Bank, Guidelines on Foreign Exchange Management for Foreign Direct Investments in Vietnam.
1. The business establishes a CAPITAL ACCOUNT (Note which clearly states the Bank about the capital account)
2. The capital contribution must be transferred to the CAPITAL ACCOUNT IN EFFECTIVE TIME AND FROM FOREIGN TO VIETNAM.
3. Notify the Department of Planning and Investment that the COMPANY has paid the capital in full and on time (Avoid being fined)
Note: Other notes
1. IMPLEMENTATION OF EMPLOYEE INSURANCE DECLARATION
2. PROCEDURE FOR ISSUING WORK PERMITS TO FOREIGNERS
3. THE PROCEDURE FOR SUBMITTING MONTHLY TAX RETURNS
4. THE FOREIGN COMPANY MUST CONDUCT AN ANNUAL AUDIT
NOTES ON THE ESTABLISHMENT OF A COMPANY FOREIGN INVESTMENT COMPANY
THE LEGAL BASIS FOR ESTABLISHING A FOREIGN CAPITAL COMPANY
1. WTO Obligations
2. The Enterprise Act of 2020 takes effect on January 1, 2021.
3. The Investment Act of 2020 takes effect on January 1, 2021.
- Investors choose investment industries because each industry will be clearly defined in the WTO commitments, and then study additional specialized laws (for example, real estate operations must have $20 billion) to know the choices, accuracy, and investment requirements.
- After choosing a business line, switch to choosing the type of investment.
· A common type of investment would be a limited liability company (one member and 2-50 members) or a joint-stock company.TYPE OF FOREIGN CAPITAL COMPANY ESTABLISHMENT
Generally, the choice of the type of foreign invested company establishment in Vietnam will have 3 main types.
1. Limited Liability Company (LLC) with one participant (For 1 individual investor or 1 investment organization)
2. LLC with 2-50 participants (for 2 or more individuals or 2 or more organizations or 1 individual + 1 organization)
3. A joint-stock company with 3 or more shareholders (for 3 or more natural persons or 3 or more organizations or 1 natural person + 2 organizations...)
· THE ONE MEMBER LIMITED LIABILITY COMPANY
· MULTI-MEMBER LIMITED LIABILITY COMPANY
Multi-member Limited Liability Company with foreign capital
1. Multi-member limited liability company is a company with from 02 to 50 participants who are organizations or individuals. A participant shall be liable for debts and other property obligations of the company to the extent of the amount of capital contributed to the company, except for the case specified in Article 47(4) of this Law. Contribution of a participant may be transferred only in accordance with provisions of Articles 51, 52 and 53 of this Law.
2. Multi-member limited liability company shall have legal status from the date of issue of the certificate of incorporation of the company.
3. A Limited Liability Company with two or more partners shall not be entitled to issue shares, except in the case of transformation into a joint stock company.
4. A limited liability company with two or more participants may issue bonds in accordance with this Law and other relevant laws; private placement of bonds shall comply with the provisions of Articles 128 and 129 of this Law.
Article 74: The one-member Limited Liability Company
1. A One-member limited liability company shall be a company owned by an organization or natural person (Called “the owner of the company"). An owner of a company shall be responsible for debts of a company and other property obligations within the limits of the authorized capital of a company.
2. A One-member Limited Liability Company shall have a legal status from the date of issue of the Certificate of business registration.
3. One-member limited liability company may not issue shares, except in the case of transformation into a joint stock company.
4. A One-member limited liability company may issue bonds in accordance with this Law and other relevant laws; private issuance of bonds in accordance with the provisions of Articles 128 and 129 of this Law.
Article 111. Joint stock companies
(1) A joint stock company is a business that:
a) The share capital is divided into equal parts called shares.
b) The shareholders may be organizations or individuals; the minimum number of shareholders is 03, the maximum number is unlimited.
c) Shareholders are liable for debts and other property obligations of the company only within the limits of the amount of capital, contributed to the company.
d) The shareholders have the right to freely transfer the shares they own to other persons, except in the cases stipulated by clause 3 of Article 120 and clause 1 of Article 127 of this Law.
(2) A joint stock company has the legal status from the date of issuance of the business registration certificate.
(3) Joint-stock companies shall have the right to issue shares, bonds and other types of securities of the company.
When establishing a foreign corporation in Vietnam, what permits are required?
- Apply for provincial people's committee policy (except central cities)
- Investment Certificate (IRC)
- Business Registration Certificate (ERC)
- Business License → (If you have a retail business)
1 #. Business License application file (BL)
Supplementing the business purpose of buying and selling goods and activities directly related to the buying and selling of goods is an adjustment to the business operating objectives, the dossier includes:
2 #. An investment examination dossier in accordance with the provisions of Government Decree No. 108/2006/ND-KP dated 22.09.2006, governing the implementation of several articles of the Investment Law.
The dossier for the issuance of a business license, as stated in Circular No. 09/2007/TT-BTM, shall include:
a) An application for a business license shall be submitted on Form MD-1 issued with Circular No. 09/2007/TT-BTM.
b) b) An explanation of the fulfillment of business conditions. The content of it shall be prepared in accordance with the appendix attached to this official dispatch.
c) Written content of goods sales and activities directly related to goods sales: a clear indication of the type of activity - wholesale, retail, operating a retail store grouping of goods, commercial advertising; commercial inspection...
In the case where the project does not involve investment in the construction of facilities (not related to the construction of factories, installation of machinery and equipment for production), it is proposed to complement the sale of goods and services activities directly related to the sale of goods, in addition to the documents referred to in paragraphs 1 and 2 above, should be added to the file of the legal entity or appropriate papers confirming the capacity and experience of the owner of the investment in achieving operational goals.
Take note of the legal authority's licensing location.
- Investment certificate evaluated and issued by the Department of Investment of the Department of Planning and Investment at the provincial level
- Business registration certificate evaluated and issued by the Department of Domestic Enterprises, Department of Planning, and Investment
- Business license issued by the Ministry of Industry and Trade
LHD law firm is one of the top ten law firms in Vietnam in terms of advising foreign capital companies in Vietnam according to Legal500 and Hg.org, with 10 years of experience and office system, working in Ho Chi Minh City, Hanoi, Da Nang, Vung Tau etc. LHD Law Firm is committed to meet the needs of foreign investors in Vietnam...
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► Review the documents to be prepared, including LEGAL CONSULTATIONS (LAW, POLICY, TAXES, human resources...)
► After receiving the investment certificate, advice on how to obtain the business registration certificate.
► Advice and application for the Enterprise Certificate (ERC) and the Investment Certificate (IRC), in addition to the Business License issued by the Ministry of Industry and Trade (Business License)
► Consultation and production of a seal engraving and report using seal samples
► Regular legal advice after the opening of the business
► Legal advice about taxes, work permit, temporary residence card and child permit (if applicable)
► Support for the registration of trademarks, designs and inventions when required by businesses (LHD Law Firm is a representative of IP No. 146 the National Office of Intellectual Property NOIP)
►Advice on CIT, PIT, and monthly, quarterly and annual tax returns
►Social insurance consultation, salary calculation (payroll)
►Consulting for personnel selection in Vietnam
►Trademark, Design, and Invention Protection Consulting
►Consultation on labor law, taxation, and contracts in Vietnam
► Virtual office rental for companies with foreign capital to provide invoice redemption. (⇒ should see)
Currently, LHD Law Firm has 3 offices in 3 major cities in Vietnam: Ho Chi Minh City, Hanoi and Da Nang.→ Over 6,800 clients from 32 countries around the world have trusted the services of LHD Law Firm for 15 years.